Looking Back at the Biggest Financial Scams of 2023 (and How To Avoid Each)

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Beware of phishing, smishing, AI fraud and others. All of these scams worked in 2023.
Updated June 6, 2024
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2023 was a wild ride for financial markets and the financial scams that targeted unsuspecting individuals throughout the year. From sophisticated phishing attacks to the insidious use of artificial intelligence (AI) in fraud, scammers continue evolving tactics, leaving individuals vulnerable to financial loss and identity theft. This article delves into the most common scams in 2023, providing insights into each method and practical tips on safeguarding against them.

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Phishing and smishing

Overview: Phishing involves scammers sending fraudulent emails that mimic reputable sources, such as banks or retailers, to trick individuals into revealing personal information. Smishing, on the other hand, extends this deception to text messages or messaging apps.

Tactics: Scammers leverage emotions, creating a sense of urgency through messages like urgent bank alerts, fake brand communications, prize-winning notifications, or bogus survey links. The goal is to prompt quick actions from recipients.

Prevention tips:

  • Be cautious of unexpected emails or messages requesting sensitive information.
  • Verify website authenticity by checking for secure connections before entering personal data.
  • Avoid clicking on unknown links; manually enter website addresses or use trusted bookmarks.
  • Refrain from sharing sensitive data via email or unfamiliar websites.
  • Install reputable security software and keep it updated to protect against phishing attempts.

OTP Bot Scam

Overview: OTP bot scams involve scammers using fake or malicious One-Time Password (OTP) bots to deceive individuals and steal personal information. These scams often occur through messaging platforms or social media channels.

Tactics: Fraudsters pose as legitimate service providers, sending messages about suspicious account activity. Recipients are urged to verify their identity by entering the provided OTP on a fake website, granting scammers access to sensitive information.

Prevention Tips:

  • Be cautious of unsolicited messages requesting OTPs or personal information.
  • Avoid clicking on links from unknown sources.
  • Verify messages with service providers through official channels.
  • Enable two-factor authentication for an extra layer of security.

AI Fraud

Overview: AI fraud encompasses the use of artificial intelligence technologies by scammers to perpetrate fraudulent activities. This includes AI-powered social engineering scams and the creation of AI-generated synthetic media.

Tactics: AI-powered social engineering involves scammers using chatbots to create realistic personas that engage with individuals online, manipulating them into sharing sensitive information or purchasing items.

AI-generated synthetic media, such as deepfake videos or audio recordings, imitates known individuals' voices to deceive victims.

Prevention Tips:

  • Be cautious of engaging in detailed conversations with unfamiliar online personas.
  • Avoid answering calls from unknown numbers and refrain from disclosing personal data.
  • If in doubt, hang up and contact the person or business directly.

Social Media Scams

Overview: The Federal Trade Commission reports the most frequently reported fraud loss in the first half of 2023 was from people who tried to buy something marketed to them on social media, accounting for 44% of all social media fraud loss reports. Reports indicate that scams on social media led to a staggering $2.7 billion in losses in the first six months of 2023.

Tactics: Scammers are increasingly exploiting social media platforms, using tactics such as fake investment opportunities, online shopping hacks, and romance scams to defraud individuals. 

Tactics can include anything from a Facebook message to fraudsters posing as members of groups you are already in to seem friendly, then asking you for help or advice on personal finance problems. Other tactics include posing as legitimate investment platforms to lure money from unsuspecting would-be investors.

Prevention Tips:

  • Online shopping scams: Be cautious when buying products advertised on social media. Check for company legitimacy and search for reviews.
  • Investment scams: Exercise extreme caution with investment opportunities promoted on social media. Verify the legitimacy of must-have investment apps and platforms independently.
  • Romance scams: Avoid sending money to individuals you haven't met. Be wary of rushed friendships or romances on social media.

Bottom line

As technology advances, so do the tactics of financial scammers. Staying informed and adopting proactive measures are essential to thwart these evolving threats. By familiarizing yourself with common scams and implementing preventative strategies, you can fortify your defenses against financial fraud in the digital age. As we enter a new year, ensure you protect yourself against the unseen dangers lurking in the world of financial scams.


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Author Details

Georgina Tzanetos Georgina Tzanetos is a former financial advisor who has been active in financial media for the past six years. She holds a master's in political economy from NYU, where she studied distressed labor markets.